KIVAM's Lee Chai-won, pioneer of value investing The legendary figure sticks to long term value investing and clients follow him
Translated by Kim So-in 공개 2020-01-20 08:00:00
이 기사는 2020년 01월 20일 08:00 thebell 에 표출된 기사입니다.
Lee Chai-won, chief executive officer (CEO) of Korea Investment Value Asset Management (KIVAM), is one of the legendary figures in South Korea’s financial investment industry. Being picked as a teacher or mentor by so many star fund managers is certainly a rare case in the industry where a lot of managers are busy showing off their characteristics and track records.Benjamin Graham- and Warren Buffett-type investment
The pioneer of South Korea’s value investing got a job at Hanshin Securities – formerly Dongwon Securities – in 1988 and made his debut as a fund manager in 1996 at Dongwon Investment Trust Management. One year after his debut, Seoul's benchmark Kospi bourse plummeted in the wake of the Asian financial crisis. The Kospi plunged from 800 points to 300 points, which dragged returns of Lee’s funds to minus 40 percent. It was a decent score compared to the Kospi, but was a painful experience for him.
During that time, he recalled a book about value investing that he read when working at Japan office. It was The Intelligent Investor, written by the ‘father of value investing,’ Benjamin Graham. Ironically, the stock market collapse opened the door to value investing. At the end of 1998, Lee launched Dongwon Value Lee Chai-won Fund and generated a return of almost 130 percent in just one year.
In 2004, when Lee was serving as a Managing Director at Dongwon Securities, he made an unexpected remark on his future strategies. Lee said that he will change investment styles from Graham’s buy-and-hold to Warren Buffett’s value-based investing.
It has been more than 20 years since Lee got into the value investing and he has led the current generation being dubbed ‘Lee Chai-won kids.’ So-called ‘Lee Chai-won kids’ are following in his footsteps. They joined KIVAM through the firm's first open recruitment and learned Lee Chai-won style value investing. They now have become CEOs and senior executives of asset management firms, preaching the ‘value’ of value inviting. Among Lee Chai-won kids are Kang Dae-kwon, CIO of Ryukyung PSG Asset Management and Choi Woong-pil, Managing Director of KB Asset Management.
Lee Chai-won Fund with big success
Lee’s track record itself can be called the ‘bible’ of the value investing. The funds that Lee is managing are following the strategy of long term value investing, showing constant upward curves.
Dongwon Value Lee Chai-won Fund generated a return of 130 percent within a year of the fund creation, thanks to the inclusion of stocks with low price-earning ratio (PER) and low price-to-book ratio (PBR) such as Samsung Electronics, SK Telecom, Lotte Chilsung Beverage, and Yuhan Corporation.
During a struggle with Dongwon Value Fund due to the dotcom bubble, Lee launched K-Fund backed by Kim Nam-gu, vice chairman of Korea Investment Holdings. Kim provided him with 70 billion won and the fund’s cumulative return from 2000 to 2006 recorded 435 percent, which is way higher than Kospi’s 56.4 percent over the same period.
Korea Value 10-year Securities Investment Trust 1 - Equity Fund is Lee’s first fund after he got promoted to chief investment officer (CIO) of KIVAM in 2006. Clients who have trusted him flocked into the fund. Around 70 percent of the fund investors remain to be long-term investors.
Despite some fluctuations the fund shows positive performance records. As of January 10 of 2020, the fund recorded a cumulative return of 105.89 percent and its family fund had assets of 540.8 billion won. Korea Value 10-year Investment Pension Equity Convertible Investment Trust, which was launched in 2007, generated a cumulative return of 72.04 percent with fund size of 580.3 billion won.
As of the end of 2019, Lee stepped down from his role as CIO to concentrate more on business management as CEO. However, he will continue to manage his funds for clients who have been the foundation of the series of 10-year investment funds.
(By reporter Heo In-hye)
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